Transparency

Quarterly financial report for the quarter ended September 30, 2015

Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This report should be read in conjunction with the Main Estimates, the Supplementary Estimates and the previous Quarterly Financial Reports.

A summary description of the Parks Canada Agency's programs can be found in Part II of the Main Estimates, and a detailed description in Part III – Report on Plans and Priorities.

This quarterly report has not been subject to an external audit. However, it has been reviewed by the Agency Audit Committee.

Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting (modified cash accounting). The accompanying Statement of Authorities includes the Parks Canada Agency's spending authorities granted by Parliament and those used by the Agency consistent with the Main Estimates and Supplementary Estimates for the 2015-2016 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the department performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Statement of Authorities (Table 1)

Authorities available for use
This quarterly report reflects the funding available for use from the 2015-2016 Main Estimates, the 2014-2015 unused spending authorityⁱ and the 2015-2016 Supplementary Estimates A. The authorities at the same time last year consisted of the 2014-2015 Main Estimates and the 2013-2014 unused spending authority.

As per Table 1 (Statement of Authorities), at September 30, 2015, Parks Canada's authorities "total available for use for the year ending March 31, 2016" are $420.2 million or 57-percent higher when compared to the same quarter of the previous year (from $737.5M to $1,157.7M). This net increase is consistent with the increase reported in the first quarter and is attributable mainly to the following elements:

• $350.4 million increase for new funding from the Federal Infrastructure Initiative;
• $120.6 million increase for improvements to highways, bridges and dams located in national parks and along historic canals (Economic Action Plan 2014);
• $17.7 million increase in Budgetary statutory authorities related to expenditures equivalent to revenues;
• $6.5 million increase related to the establishment of new national parks and national marine conservation areas;
• $69.5 million decrease for the 2014-2015 unused spending authority; and
• $5.5 million net decrease from other adjustments.

Authorities used during the quarter
In the second quarter of 2015-2016, total net budgetary expenditures were $262.4 million compared to $199.6 million reported for the same period in 2014-2015, resulting in an increase of $62.8 million or 31-percent. The increase is mainly due to expenditures under the Agency's Asset Investment Program as a result of significant new funding to rehabilitate the Agency's built assets.

Year to date used
The year to date total budgetary expenditures were $402.4 million compared to $321.9 million reported at the same time last year, indicating an $80.5 million (25%) increase. The increase is mainly due to expenditures in support of the Asset Investment Program. This is partially offset by the one-time transition accounting treatment of $10 million for implementing salary payment in arrears by the Government of Canada made in the first quarter of 2014-2015.

Budgetary Expenditures by Standard Object (Table 2)

Planned by Standard Object
Total planned expenditures in the second quarter of 2015-2016 are $420.2 million higher compared to the previous year. This variance is due to the increase in planned spending for Acquisition of land, buildings and worksⁱⁱ ($300.1 million), Repairs and Maintenance ($35.9 million) and Personnel ($46.1 million). These increases are consistent with the additional funding received under the Agency's Asset Investment Program.

Expended by Standard Object
As per Table 2 (Budgetary Expenditures by Standard Object), the total expended in the second quarter ending September 30, 2015 is $62.8 million (31%) higher, compared to the previous year, and the year to date expenditures have increased by $80.5 million (25%). The overall variance can be explained by the following:

Professional and special services expenditures have increased in the second quarter by $12.5 million, compared to the previous year, and the year to date expenditures have increased by $18.9 million. The increases are in areas such as engineering consulting services and architectural services.

Acquisition of land, buildings and works expenditures have increased in the second quarter by $45.7 million, compared to the previous year, and the year to date expenditures have increased by $60.5 million. The majority of the increases are investments in highways and bridges.

These increases in expenditures are in support of the Agency's Asset Investment Program.

All other expenditures are consistent with prior year spending trends.

Risks and Uncertainties

Parks Canada's objectives and Strategic Outcome are influenced by various internal and external factors. The Agency undertakes a risk assessment every year to support priority setting and resource allocation decisions. The risk assessment identifies key risks that have the greatest impact on the Agency's ability to achieve its Strategic Outcome and expected results. The Agency has identified Asset Condition, Competitive Position, Natural Disasters and External Development Forces as its key corporate risks for 2015-2016ⁱⁱⁱ. The following are examples of some of the mitigation strategies that Parks Canada is undertaking in order to address these risks:

• investing funding to address the backlog of deferred work and restore the condition of built heritage, visitor experience and townsite assets, as well as highway and canal infrastructure;
• targeting investments in demand-driven opportunities for visitors (e.g. diversified accommodations, recreational activities and new media technologies in support of on-site learning); and
• continuing to undertake priority natural resource conservation and restoration actions, including recovery of priority species at risk and their habitat, in order to strengthen ecosystem resilience.

Significant Changes in Relation to Operations, Personnel and Programs

There are no significant changes in relation to operations, personnel and programs to report during this quarter.

Approval by Senior Officials

Gatineau, Canada
November 20, 2015

ⁱ The Parks Canada Agency operates on the basis of a two-year appropriation, whereby any surplus amount reported at the end of a fiscal year is carried forward and is available to be used the following year. However, any portion of the unspent funds not spent at the end of the two years is lost. This process differs from that of other government departments as they can only claim five percent of their operating vote and twenty percent of their capital vote through the carry forward process each year.

ⁱⁱ As per the Government wide Chart of Accounts, Acquisition of land buildings and works includes improvements involving additions or changes of a structural nature and reconstructions of physical assets.

ⁱⁱⁱ The complete list of Corporate risks identified by Parks Canada Agency can be found in Part III – Report on Plans and Priorities.